Facebook 's Initial Public Offering registration outlines that the company earned $3.7 billion in revenues last year and made $1 billion in profits. The company hopes its IPO will raise $5 billion.

As a privately held company, Facebook hasn't previously had to report its figures. Now that it has filed for an IPO, it's public knowledge that the company's revenues grew by 88 percent last year while its profits were up 65 percent over 2010.

The filings note that Zynga games' virtual currency and advertising made up 12 percent of Facebook's revenue and warned, "if the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected."

Zuckerberg claims "Facebook exists to make the world more open and connected, not just to build a company"

Facebook's founder Mark Zuckerberg wrote in a letter accompanying the filing that "Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.

"We think it’s important that everyone who invests in Facebook understands what this mission means to us, how we make decisions and why we do the things we do. I will try to outline our approach in this letter."

Zuckerberg continued, "At Facebook, we build tools to help people connect with the people they want and share what they want, and by doing this we are extending people’s capacity to build and maintain relationships.

"People sharing more — even if just with their close friends or families — creates a more open culture and leads to a better understanding of the lives and perspectives of others. We believe that this creates a greater number of stronger relationships between people, and that it helps people get exposed to a greater number of diverse perspectives."

Failing to be "open and connected" with Apple in order to build a business

At the same time, Facebook clearly intends to maintain control over how it forms connections and embellishes the culture in a profitable way. The company notoriously fought with Apple over its attempts to include Facebook connections in its iTunes Ping service, and was later reported to have blocked Apple's initial efforts to integrate Facebook into iOS 5 in a manner similar to the Twitter integration Apple did deliver for both Ping and iOS 5.

Jobs described Facebook as demanding "onerous terms that we could not agree to" before the social network pulled out of its partnership with Apple on Ping, although it was later reported that Jobs later met with Zuckerberg in an informal setting to discuss the matter further just prior to Jobs' passing away.

Last summer, Facebook also developed an iPad app that it then refused to officially release, resulting in its lead developer, Jeff Verkoeyen, leaving the social network out of frustration. When the code did leak as part of the iPhone app, Facebook blocked access to it from its servers.

Several reports suggested that the company held the iPad app as leverage in negotiations with Apple, indicating that the company threatened to throw its efforts behind a web app version instead. In parallel, Facebook also worked with HP to release a native, integrated app for the firm's failed webOS tablet.

Facebook eventually released its iPad app shortly after Jobs passed away. The company released the app without support for "Credits," a virtual currency that violates Apple's policies for App Store titles.

Nearly 850 million users

Facebook's filings also revealed that in December it had 845 million active users within the month and 483 million active users on a daily basis. Daily active users are up 48 percent over a year ago.

The company notes that these numbers "are reasonable estimates, and we take measures to improve their accuracy, such as eliminating known fictitious or duplicate accounts. There are inherent challenges in measuring usage across large online and mobile populations around the world. For example, there may be individuals who have multiple Facebook accounts in violation of our terms of service, despite our efforts to detect and suppress such behavior. As another example, applications on certain mobile devices may automatically contact our servers for regular updates with no user action involved, and this activity may cause our system to count the user associated with such a device as an active user of Facebook."

The company also recounted servicing 100 billion "friend" connections between users, 2.7 billion "likes" and comments per day and a quarter billion photo uploads per day in the winter quarter.

There are lot more better gambling opportunities, IMHO.
It is just too risky to predict the peak price. The buying craze may last for weeks till it finally settles and starts its inevitable fall.

Ah, it wouldn't be a long-term short. I just want it to drop 10-15% in a couple of weeks (or days), then I'd pull the plug.

I know there are better gambling opportunities, but FB looks like a no-brainer for a really quick short. I'm certainly not betting the farm on FB. But if I can walk away with a couple of grand (pre-tax) in a week or two, I think it's worth it.

I think $5 billion sounds reasonable. It's the $100 billion that was farfetched. I think this could work.

You're confused about the percentage.

Facebook is only selling a small portion of its shares - I haven't dug far enough to get the information from a good source, but what I've found suggest that they're only selling 5% of their shares - so $5 B for the IPO (for 5% of the company) EQUALS a $100 B valuation.

(another source vaguely hinted that this would be for 10% of the company which would put the valuation at $50 B.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

Facebook is only selling a small portion of its shares - I haven't dug far enough to get the information from a good source, but what I've found suggest that they're only selling 5% of their shares - so $5 B for the IPO (for 5% of the company) EQUALS a $100 B valuation.

(another source vaguely hinted that this would be for 10% of the company which would put the valuation at $50 B.

Mea culpa. That's a major gaffe. \

This bot has been removed from circulation due to a malfunctioning morality chip.

You really should do it. I profit all the time from economically "no-brain" (to use your own words) folks like you who act without any analysis. <3 it. Especially this case where the analysts are divided in half. But I'm sure you knew that already.

That's ok; I'm sure if it was Steve's new company; you would bet the farm and the Honda civic.

Quote:

Originally Posted by cvaldes1831

Ah, it wouldn't be a long-term short. I just want it to drop 10-15% in a couple of weeks (or days), then I'd pull the plug.

I know there are better gambling opportunities, but FB looks like a no-brainer for a really quick short. I'm certainly not betting the farm on FB. But if I can walk away with a couple of grand (pre-tax) in a week or two, I think it's worth it.

Facebook is only selling a small portion of its shares - I haven't dug far enough to get the information from a good source, but what I've found suggest that they're only selling 5% of their shares - so $5 B for the IPO (for 5% of the company) EQUALS a $100 B valuation.

(another source vaguely hinted that this would be for 10% of the company which would put the valuation at $50 B.

Ah okay, I stand corrected. So $100 billion valuation. Sounds on the high side, I was putting them at a ballpark of $50 billion. Still, $50-$100 billion valuation, like I said, it may piss you off, but that's the power of Facebook today.

Bubble, bubble and more bubble!
Watch Apple bring out an awesome social networking program with all the bells and whistles. Watch as all those on paper millionaires blow their money on extravagant toys and then watch as the FB boom falls like a lead ball in pig urine.
The investors are going to say the fun and games are over nerds. Time to make the REAL PLAYAS money. Before you know it FB will start to come in different flavors. Where each flavor, like going in ascending numerical order, will offer more sh** than the proceeding flavor.
And of course the top tier flavors will cost and cost more.
Screw that!
FB's IPO is for a short term gain before the bust.

Number of active users (logging in at least once a month):
845,000,000 (eight hundred and forty five million)

Divide the first number by the second gives you the average value per user, because lets be honest without the user base, one could argue the company is pretty much value-less.

So, 100,000,000,000 / 845,000,000 = $118 average value per user!

Really? My login to facebook is worth that much?* Even if you cut down the suspected valuation to half that, its still close on $60 per user. Or if you go with the number of active daily users (which is the amount that the investors and advertisers are probably doing their sums with because thats who you'll be targeting your ads at), you get over $200 per user when using the hundred billion valuation.

I have a hunch that maybe that $100,000,000 is just a tad over inflated...

Number of active users (logging in at least once a month):
845,000,000 (eight hundred and forty five million)

Divide the first number by the second gives you the average value per user, because lets be honest without the user base, one could argue the company is pretty much value-less.

So, 100,000,000,000 / 845,000,000 = $118 average value per user!

Really? My login to facebook is worth that much?* Even if you cut down the suspected valuation to half that, its still close on $60 per user. Or if you go with the number of active daily users (which is the amount that the investors and advertisers are probably doing their sums with because thats who you'll be targeting your ads at), you get over $200 per user when using the hundred billion valuation.

I have a hunch that maybe that $100,000,000 is just a tad over inflated...

(* hypothetical question - I no longer have a facebook login.)

This has been discussed before. It is useful to do comparisons.

Google reportedly averages $27 in revenue per user. If FB were to get the same revenue per user, the $100 B figure would be 4 times revenues - or only 16 times earnings (if FB maintained its current margins). That is not at all out of line.

It's especially plausible when you consider that the average FB user spends FAR more time on FB than the average Google user spends on Google. Many people spend hours a day on FB, so it's not hard to imagine greater revenues per user if FB decides to be aggressive in commercializing the site.

Is $100 B (or $50 B) the right number? No one knows. In 2 years, it will be possible to look back and SOMEONE will be saying "I told you so". We just don't know which side yet.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

Although I am all for sharing, I cannot believe people use Facebook. To me, it is more of 'hanging out your laundry, weather if it's clean or dirty'. It comes across as 'look what I did' because people like to show of. Telling the world how many vacations you had this year, what you bought etcetera, to me it's just a farce. Although there is obviously the 'connection people part' that it offers, I cannot understand what was wrong with (group)email to begin with.

I went to a concert with a friend and after we got into the (closed) arena he wanted to 'check-in' but was unable to get a signal. He wanted to leave the arena, get a arm-wrist or ink stamp, get outside, check into Facebook and get back in just so his friends would know he was at this concert. I asked him if this was really worth it because we would be way in the back of the arena because of this re-entry.

To me, FB is just crap, others love it. Especially advertisers, which is very understandable with the amount of information FB can sell them. I have no idea what FB sells, but the ads speak for themselves. Just like Google.

If I wan to communicate with people I call. That's personal, and if I want to 'group info' a whole bunch I mail. Am I getting old? I certainly cannot understand why this company should be worth billions of dollars.

Not all my FB opinions are negative, but most/some are:

Mark Zuckerberg certainly had a fantastic vision when creating this social network

Why would I 'automatically want to be friends with someone who replies to something I write on a friends' wall? Sure, that way FB gets to a 100 billion friendships, but are they really friends, or just people wanting to have as much connections as possible?

Zuckerberg had the word 'bitch' on his business card. I can understand you are feeling great and on top of the world when you start your own company, but really?

They don't seem to be doing anything about the 7+ million users who are under 13 years of age (minimum required)

Draw your own conclusions about the founder with below snippet from Wikipedia:

"Mark Zuckerberg wrote Facemash, the predecessor to Facebook, on October 28, 2003, while attending Harvard as a sophomore. According to The Harvard Crimson, the site was comparable to Hot or Not, and "used photos compiled from the online facebooks of nine houses, placing two next to each other at a time and asking users to choose the 'hotter' person. To accomplish this, Zuckerberg hacked into the protected areas of Harvard's computer network and copied the houses' private dormitory ID images. Harvard at that time did not have a student "facebook" (a directory with photos and basic information). Facemash attracted 450 visitors and 22,000 photo-views in its first four hours online."

Revenue
Most of Facebook's revenue comes from advertising. Microsoft is Facebook's exclusive partner for serving banner advertising, and therefore Facebook serves only advertisements that exist in Microsoft's advertisement inventory.

Facebook generally has a lower clickthrough rate (CTR) for advertisements than most major Web sites. According to BusinessWeek.com, banner advertisements on Facebook have generally received one-fifth the number of clicks compared to those on the Web as a whole, although specific comparisons can reveal a much larger disparity. For example, while Google users click on the first advertisement for search results an average of 8% of the time (80,000 clicks for every one million searches), Facebook's users click on advertisements an average of 0.04% of the time (400 clicks for every one million pages).